Stirring up the South China Sea (I)

China is one of its own worst enemies in the South China Sea, as its local governments and agencies struggle for power and money, inflaming tensions with its neighbours, illustrated by Beijing’s latest standoff with the Philippines.

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Executive Summary

The conflicting mandates and lack of coordination among Chinese government agencies, many of which strive to increase their power and budget, have stoked tensions in the South China Sea. Repeated proposals to establish a more centralised mechanism have foundered while the only agency with a coordinating mandate, the foreign ministry, does not have the authority or resources to manage other actors. The Chinese navy’s use of maritime tensions to justify its modernisation, and nationalist sentiment around territorial claims, further compound the problem. But more immediate conflict risks lie in the growing number of law enforcement and paramilitary vessels playing an increasing role in disputed territories without a clear legal framework. They have been involved in most of the recent incidents, including the prolonged standoff between China and the Philippines in April 2012 in Scarborough Reef. Any future solution to the South China Sea disputes will require a consistent policy from China executed uniformly throughout the different levels of government along with the authority to enforce it.

China’s maritime policy circles use the term “Nine dragons stirring up the sea” to describe the lack of coordination among the various government agencies involved in the South China Sea. Most of them have traditionally been domestic policy actors with little experience in foreign affairs. While some agencies act aggressively to compete with one another for greater portions of the budget pie, others (primarily local governments) attempt to expand their economic activities in disputed areas due to their single-minded focus on economic growth. Yet despite the domestic nature of their motivations, the implications of their activities are increasingly international. Other factors – both internal and external to China – have also been responsible for increasing tensions, but they are beyond the scope of this study. Regional dynamics, including arms build-ups, competition for resources and increasing nationalist sentiment in other claimant countries are the subject of a separate report.

Effective coordination of actors is also hampered by a lack of clarity over precisely what is supposed to be defended. China has yet to publicly clarify the legal status of the so-called nine-dashed line that appears on most Chinese maps, encompassing most of the South China Sea. While the foreign ministry has taken steps to try to reassure its neighbours that Beijing does not claim the entire South China Sea and has at least partially justified its claims on the basis of the United Nations Convention on the Law of the Sea (UNCLOS), the government cannot easily back down from claims to significant portions of the sea that are based on historical presence in the region. Local government agencies take advantage of this lack of legal clarity when engaging in activities in disputed areas.

Beijing has deliberately imbued the South China Sea disputes with nationalist sentiment by perpetually highlighting China’s historical claims. This policy has led to a growing domestic demand for assertive action. While Beijing has been able to rein in nationalist sentiment over the South China Sea when it adopts a specific policy, this heated environment still limits its policy options and its ability to manage the issue.

In mid-2011, as tensions in the sea led to neighbouring countries seeking closer military ties with the U.S., China adopted a less assertive approach. While Beijing’s overall emphasis on maintaining the status quo still includes a preference for bilateral negotiations, it is strengthening regional relations through high-level visits and multilateral engagement by signing with the Association of South East Asian Nations (ASEAN) the Guidelines for the Implementation of the Declaration of Conduct (DOC) in the South China Sea.

Internally, China has taken measures to calm nationalist sentiment and discourage aggressive actions by local agencies. However, China’s current approach remains characterised by numerous ministerial-level actors and law enforcement agencies with no effective coordinating authority and no high-level long-term policy. While repeated and failed attempts to establish a centralised mechanism on maritime management show a lack of political will to address the coordination issue, Beijing might also see benefit in ambiguity. As long as this situation exists, however, its new conciliatory approach is unlikely to be sustainable. Ultimately, the ability to manage relations in the South China Sea and resolve disputes will present a major test of China’s peaceful rise.

South China Sea: The Positions and the Facts

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On 12 July, the International Tribunal on the Law of the Sea under the Permanent Court of Arbitration in The Hague will deliver a ruling that will give new direction to one of Asia’s most contentious issues, the South China Sea. Tensions and military preparations have been steadily building up over recent years between six sides with competing claims on this strategic body of water. Superpower frictions have also risen as the U.S. and China have upped their naval and air force presence.

In this Q&A ahead of the judgment, Yanmei Xie, our China Senior Analyst, and Tim Johnston, our Asia Program Director, lay out the facts of the case and the positions of the parties.

Claims have been staked to parts of the South China Sea by five countries – Brunei, China, Malaysia, the Philippines and Vietnam – and Taiwan. Indonesia is not a formal claimant, but the Exclusive Economic Zone (EEZ) generated by its Natuna Islands overlaps with China’s “Nine-Dash Line”.

The Nine-Dash Line line first appeared as eleven dashes on a Chinese map in 1947 – China removed two dashes in the Gulf of Tonkin in 1953. Beijing has never clarified the coordinates of the Nine-Dash Line, nor articulated exactly what it is claiming within it.

What is being disputed between China and the Philippines in the South China Sea?

China claims all land features in the South China Sea. The Nine-Dash Line loops down from the coast to take in most of the South China Sea and slices into the Philippines’ claimed EEZ. The Philippines claims about 50 land features in the Spratly island chain and the Scarborough Shoal.

The Philippines asked the tribunal to rule on fifteen submissions across three groups of issues.

First, it argues that China’s Nine-Dash Line claim is contrary to United Nations Convention on the Law of the Sea (UNCLOS), to which both are parties.

Second, it requested the tribunal determine the statuses of land features occupied by China. It argues the features are “rocks” and “low-tide elevations”, not “islands”. UNCLOS defines low-tide elevations as natural land features that are submerged at high tide, and islands and rocks as those that remain above water. Islands are distinguished from rocks by their ability to “sustain human habitation or economic life of their own”. States may claim sovereignty over islands and rocks. Both are entitled to a twelve-nautical mile territorial sea. Only islands are entitled to a 200-nautical mile EEZ. Low-tide elevations may not be claimed, and do not normally generate any maritime entitlements on their own.

Third, the Philippines requested that the tribunal declare that China has violated UNCLOS through its enforcement, construction, and fishing activities. It argues that China has illegally interfered with the Philippines’ lawful exercise of sovereign rights and has failed to fulfil its obligations to protect the marine environment.

In October 2015, the tribunal ruled that it had jurisdiction on seven submissions. They involve the status of land features, and the lawfulness of China’s practices around the Scarborough Shoal and Second Thomas Shoal. The tribunal has reserved judgment on jurisdiction over seven other submissions and asked the Philippines to clarify and narrow one submission.

How has China responded?

China rejected the arbitration and has refused to participate in the proceedings. It has also repeatedly stated it will not accept the tribunal’s ruling. In December 2014, China issued a position paper arguing the tribunal does not have jurisdiction over the case.

First, China argues that the subject-matter of the arbitration is sovereignty over maritime features, and is thus beyond the scope of UNCLOS. Second, it argues that the subject-matter concerns maritime delimitation, which it has legally excluded from the tribunal’s jurisdiction. Third, it says that the two sides agreed to settle their disputes through negotiation, to the exclusion of any other means.

What are some of the key issues to watch for in the ruling?

The tribunal is expected to rule on the status of Chinese-occupied land features in the Spratly chain. If it determines the features are not natural islands, it would limit the legal rights China can claim around them. Since early 2014, China has reclaimed 3,200 acres of land around seven features, and built airstrips, ports, high-frequency radar facilities, solar arrays, lighthouses and support buildings on them.

Particularly important will be the expected tribunal ruling on the status of Itu Aba/Taiping. Itu Aba (the Philippines name that the tribunal has been using) is the largest natural land feature in the Spratly chain, and hosts a Taiwanese outpost with about two hundred people. It is claimed by the Philippines, China, Vietnam, and Taiwan. If the tribunal determines that Itu Aba is an island, the feature’s EEZ would overlap with that claimed by the Philippines. Such a ruling would undermine several claims by the Philippines. Therefore, though the Philippines did not directly request a ruling on its status, it has strongly argued that Itu Aba is not an “island” but a “rock”.

The tribunal has deferred a decision on whether it has jurisdiction to rule on the legality of the Nine-Dash Line until it assesses the nature of China’s claimed rights. If it rules on the issue, it could be momentous. An adverse ruling on the line would significantly reduce the area that China can legally claim. But because China has offered no legal explanation on the line, the tribunal may lack a basis to directly repudiate it. The tribunal could instead state that Chinese claims have to strictly comply with UNCLOS, thus leaving China room to gradually bring its claims into compliance.

How have relevant and concerned parties responded?

Among the claimants, Vietnam and Malaysia sent observers to the proceedings. In December 2014, Vietnam submitted a “Statement of Interest” to the tribunal supporting the proceedings and the upcoming ruling, stating opposition to China’s Nine-Dash Line claim and reaffirming Vietnam’s claims.

Australia, Indonesia, Japan, Singapore and Thailand also sent observers to the proceedings. The U.S. said “the parties are obligated to respect and abide by” the arbitration ruling. The UK, Japan and Australia similarly called for parties to adhere to the ruling. New Zealand expressed support for the Philippines’s rights to seek arbitration. The EU and G7 called for respect for arbitration procedures.

Countries that have explicitly endorsed China’s position include Sudan, Gambia, Kenya, Russia, South Africa, Zimbabwe and Cambodia. Beijing says the number of countries that support its position is growing, but has declined to provide a specific figure or a list. A few countries, including Fiji, Poland, Slovenia and Bosnia and Herzegovina, have denied claims that they side with China.

What will be the impact of the tribunal’s ruling?

The ruling can reduce the scope of the South China Sea disputes, but will not solve them. The tribunal was not requested to and will not rule on sovereignty: it is beyond its jurisdiction to decide on which nation owns the land features. It will not determine maritime boundary delimitation, on which China has exempted itself from compulsory resolution. There are three other claimants who are not parties to the arbitration.

The ruling will be binding on the Philippines and China, but Beijing is unlikely to comply with it in the short term. The process, however, could set an example for other claimants to follow and thus provide incentive for China to negotiate. By providing greater legal clarity and generating international attention, it could reduce the asymmetry between China and other claimants in negotiations. It could even encourage Beijing to reexamine the diplomatic and political cost of its expansive claims.

The ruling is likely to escalate the war of words. Both China and the U.S. are likely to intensify diplomatic manoeuvres to win support for their respective positions. If China declares an air defence identification zone in the South China Sea, the U.S. is likely to challenge it with military fly-bys. If the U.S. conducts more frequent and higher-profile freedom of navigation patrols near Chinese-held reefs, Beijing may feel compelled to intercept or even evict U.S. vessels. The risk of military clashes is small, but cannot be ruled out.

What does Crisis Group recommend?

Escalation to military standoffs is not inevitable. The ruling could present an opportunity to reverse the collision course.

There are face-saving ways for Beijing to demonstrate respect for international law, beginning with incrementally backing away from the Nine-Dash Line and bringing its claims closer to principles of the UNCLOS. China can, for example, refrain from taking enforcement actions at the fringes of the Nine-Dash Line. China can also move to conclude its boundary delimitation negotiations with Vietnam outside the mouth of the Gulf of Tonkin. Success there would show Beijing’s sincerity in negotiations. Beijing can help make substantive progress on formulating a Code of Conduct. This would commit all parties to binding norms of behaviour and help restore South East Asia’s faith in China’s pledge for peace and cooperation.

As long as the U.S. does not itself ratify UNCLOS, it will remain a flawed spokesperson for a rules-based order. Washington’s unilateral display of naval power can send a message of deterrence, but it will take painstaking multilateral diplomacy to persuade China to commit to negotiations with the Association of Southeast Asian Nations (ASEAN) to find a rules-based solution. Washington’s military manoeuvres and bilateral security arrangements have to be matched by efforts to shore up ASEAN’s capacity.

ASEAN, with support from its partners, has to step up and meet China as a firm and coherent negotiating partner. Acquiescing to Beijing’s pressure or overreliance on Washington’s deterrence will unravel decades of progress in regional self-governance by consensus and turn South East Asia’s nightmare of getting caught between two scuffling giants into reality.